NEW YORK, NY/ACCESSWIRE/March 6, 2022/ Pomerantz LLP announces that a class action lawsuit has been filed against New Oriental Education & Technology Group Inc. (“New Oriental” or the “Company”) (NYSE:EDU) and certain of its officers. The class action lawsuit, filed in the United States District Court for the Southern District of New York and registered as 22-cv-01876, is on behalf of a class consisting of all persons who purchased new stock. Eastern American Depository (“ADS”). between April 24, 2018 and July 22, 2021, both dates inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”) against New Oriental and some of the company’s top executives and directors.
If you are a shareholder who purchased or otherwise acquired New Eastern ADSs during the Class Period, you have until April 5, 2022 to ask the court to appoint you as the lead plaintiff for the Class. A copy of the complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those making inquiries by e-mail are encouraged to include their mailing address, phone number and number of shares purchased.
[Click here for information about joining the class action]
New Oriental provides educational programs, services and products to students throughout the People’s Republic of China (“China” or “PRC”) and offers online courses through its e-learning platforms. In the early 2000s, the Company entered the K-12 after-school tutoring business. Additionally, in 2005, New Oriental launched its online education services through its Koolearn platform. The company now provides comprehensive online training services through its subsidiary, Koolearn Technology Holding Limited.
In February 2018, the Chinese government issued a set of regulations aimed at limiting excessive tutoring fees and limiting the perceived societal harm resulting from the pervasiveness of for-profit tutoring programs such as those offered by New Oriental. Among other changes, the regulations prohibited after-school tutoring institutions from offering courses beyond the curriculum and curricula applicable to respective primary and secondary students, from offering courses designed to improve examination and to link school enrollment to tutoring results. Overall, the regulations were intended to reduce disparities in academic performance between relatively well-off students who were able to afford tutoring after school and those who could not.
Because New Oriental operates in a highly regulated industry in China, the impact of new laws and regulations affecting the Chinese tutoring industry and the Company’s compliance with China’s regulatory framework and government prerogatives are of significant importance to Investors. In fact, New Oriental has recognized the material importance of maintaining strict compliance with Chinese laws, regulations and government prerogatives. In New Oriental’s Form 20-F filed with the SEC on September 16, 2020, New Oriental said the company “is making continuing efforts to comply with the requirements of such regulations and implementations” governing post-tutoring activities. school imposed by the Chinese government. , and any failure to do so could “materially and adversely affect [New Oriental’s] business and results of operations.”
The Complaint alleges that, throughout the Class Period, the Defendants made materially false and misleading statements regarding the company’s business, operations and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) New Oriental’s revenues and operational growth were the result of deceptive marketing tactics and abusive business practices that undermined Chinese regulations and policies and put the company at extreme risk of more drastic measures being imposed on the Company; (ii) New Oriental had engaged in deceptive and fraudulent advertising practices, including providing false and misleading information about discounts designed to hide the true cost of the Company’s programs for its customers; (iii) New Oriental falsified teachers’ qualifications and experience in order to attract clients and increase student enrollment; (iv) New Oriental had defied previous government warnings against linking school enrollment to the provision of private tutoring services; (v) as a result of the foregoing, New Oriental was subject to an undisclosed tail risk of adverse enforcement action, regulatory fines and penalties, and the imposition of new rules and regulations adverse to the business and interests of the Company; (vi) the new rules, regulations and policies to be implemented by the Chinese government following China’s annual “two sessions” parliamentary meetings were far more stringent than those presented to investors by the defendants and were in fact a existential threat to the company and its activities; and (vii) as a result of the foregoing, defendants’ positive statements about the company’s business, operations and prospects were materially misleading and lacked a reasonable factual basis.
On April 25, 2021, media reported that the city of Beijing had fined four online education agencies, including New Oriental subsidiary Koolearn, the maximum fine of 500,000 yuan (about $80,000) each. for misleading customers with false advertisements regarding course prices.
On May 12, 2021, news reports revealed that an impending Chinese government crackdown on the tutoring industry would be broader and more drastic than previously publicly known, including that regulators had already taken adverse action against New Oriental and other for-profit organizations. tutoring companies.
On this news, the price of New Oriental’s ADS fell $2.77 per ADS, or 19.4%, over the next two trading sessions to close at $11.51 per ADS on May 13, 2021.
On June 1, 2021, Chinese regulators announced that they had fined fifteen off-campus educational institutions, including New Oriental, for illegal activities such as false advertising and fraud.
On this news, the price of New Oriental’s ADS fell $1.77 per ADS, or 16%, over the next two trading sessions to close at $9.32 per ADS on June 3, 2021.
Then, on July 23, 2021, China unveiled a sweeping overhaul of its education sector, banning companies that teach the school curriculum from making a profit, raising capital or going public, effectively ending any further growth. potential of the for-profit tutoring sector in China. .
On July 25, 2021, New Oriental released an “update” on the new regulations, which stated that the company “will comply with relevant rules and regulations when providing educational services” and “expects that such measures have a significant negative impact on its future”. academic tutoring services related to academic subjects in China’s compulsory education system. »
On this news, New Oriental’s ADS price fell $4.46 per ADS, or almost 70%, over the next two trading sessions to close at $1.94 per ADS on July 26, 2021.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris and Tel Aviv, is recognized as one of the leading firms in the areas of corporate litigation, securities and antitrust. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues the tradition he established, fighting for the rights of victims of securities fraud, breaches of fiduciary duty and corporate misconduct. The firm recovered numerous multimillion-dollar damages on behalf of class members. See www.pomlaw.com
THE SOURCE: Pomerantz LLP
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